EU-Colombia/Peru to strike Free Trade Agreement

26 June, 2012

ByLucy Britner

EU spirits producers have welcomed the signing of the EU-Colombia/Peru Free Trade Agreement – expected to take place in Brussels at 5pm local time today (June 26).

The agreement intends to ensure geographically-specific products like scotch whisky and cognac are recognised in the South American countries as well as introduce import tariff reductions or eliminations.

Colombia is the largest market in the Andean community for European spirits. In 2010, exports to Colombia were valued at €19 million, and €14 million to Peru. In Colombia, imports represent only 13% of the spirits market - meaning there is significant room for growth.

The EU’s Trade Commissioner, Karel De Gucht is to sign the deal - opening the door for formal ratification in the EU and Colombia and Peru.

The European Parliament will vote on the agreement later this year and it is expected that MEPs will give their approval. Provided this happens, the FTA can enter into provisional application, pending ratification in Colombia and Peru. EU Member States will ratify in their national parliaments over the coming years.

In Colombia, EU spirits currently face a 15% import tariff upon entry to the market. For most EU spirit drinks this tariff will be removed immediately, except for rum, whisky and vodka where the tariffs will reduce to 0% over 11 years. EU geographical indications including scotch whisky, cognac, Polish vodka and grappa will be recognised and protected in Colombia and Peru. The agreement will also lead to the eventual removal of what the European Spirits Organisation (CEPS) described as “discrimination against importers when it comes to both excise tax and the unfair practices of the spirits monopolies in the different departments of Colombia”.

The US and Canada already hold active trade agreements with Colombia and CEPS believes the EU needs to ensure it will not face a competitive disadvantage in the long term.

CEPS director general Paul Skehan, said: “This is the kind of good news story that Europe needs to help our economy return to growth. Colombia and Peru are markets with great potential. All parties will see important benefits from this agreement which extend beyond simple tariff reductions to wider social and environmental issues EU business is already present and sharing its CSR practices and employee benefits on the ground. This has to be a good thing.”